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Thursday, 4 February 2010
Page: 520

Senator WONG (Minister for Climate Change and Water) (3:35 PM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The purpose of the National Broadcasting Legislation Amendment Bill 2009 is to amend the Australian Broadcasting Corporation Act 1983 (ABC Act) and Special Broadcasting Service Act 1991 (SBS Act). The amendments would also reinstate the ABC staff-elected Director.

This Bill fulfils two important and longstanding commitments by the Labor Party. We undertook in our National Platform in 2007 to end political interference in the ABC by introducing a new transparent and democratic board appointment process in which non-executive Directors are appointed on the basis of merit. We promised to deal with SBS Board appointments in the same way, and to restore the staff-elected director on the ABC Board. Labor took these promises to the 2007 election and is now delivering on them with this Bill.

The intention of these amendments is to achieve better long term outcomes for both Boards and consequently improve governance in our national broadcasters.

At present, ABC and SBS Board appointments are made by the Governor-General on the recommendation of the Government of the day, in accordance with provisions in the ABC and SBS Acts. While these Acts specify generic criteria against which candidates are to be assessed prior to appointment, they establish no formal process for appointments and do not require any degree of transparency in relation to how candidates are selected.

In practice this lack of due process has resulted in long-running concerns that ABC and, to a lesser extent, SBS Board appointments have been politically motivated. Commentators have also raised concerns that perceived political appointments have diminished the level of expertise which particular Board members can bring to bear on the range of complex technological and financial issues facing the national broadcasters.

There is no doubt the media landscape is undergoing a period of rapid change and that the ABC and SBS will face significant challenges over the coming years. Our national broadcasters need to have the best qualified and most experienced Board members available to meet these challenges. A transparent and arm’s length Board appointment process is essential to strengthen the independence and impartiality of our national broadcasters.

In order to address the perceived lack of transparency and to ensure the best candidates are available, the Government has developed a new appointment process whereby an independent panel will conduct a merit-based selection process for non-executive Directors to the ABC and SBS Boards and provide advice to the Government on suitable appointments.

Guidelines were released in October 2008 and four appointments were made in March 2009 under the new process. The Nomination Panel was convened to assess the applications and provide a short-list of recommended candidates to the Minister from an outstanding field of over three hundred applicants from across the community.

This large number of candidates expanded the field and improved the number of candidates available for selection. The Governor-General subsequently appointed four exceptional new Directors, two each to the ABC and SBS Boards.

The merit-based selection process takes the politics out of the appointment process and puts the focus where it should be, on getting the best candidates for the Boards.

The amendments will formalise this new merit-based appointment process in the legislation of both broadcasters and ensure it is used consistently to fill all future non-executive Director vacancies. The legislation is also drafted to ensure that the Nomination Panel conducts its selection process at arms-length from the Government of the day.

Transparency is a key feature of the new arrangements. Consistent with this principle, the incumbent will be advised in writing at least four months before the expiry of their appointment whether it is intended to reappoint them, or not reappoint them and advertise the position to test the field and commence a merit-based selection process.

Features of the new process include:

  • The assessment of applicants’ claims will be undertaken by an independent Nomination Panel established at arm’s length from the Government;
  • Vacancies will be widely advertised, at a minimum in the national press and/or in major State and Territory newspapers, and the website of the Department of Broadband, Communications and the Digital Economy;
  • The assessment of candidates will be made against a core set of published selection criteria which may be supplemented by additional criteria where appropriate for specific positions, for example to address particular skill gaps;
  • The Nomination Panel will provide a report to the Minister with a short-list of at least three candidates for each vacant position.
  • The Minister will select a candidate from the short-list and will write to the Governor-General recommending the appointment as required under the ABC and SBS Acts.
  • In accordance with the Government’s election commitment, the appointment of current or former politicians or senior political staff will be prohibited.
  • Where the vacancy is that of the Chair of the ABC Board, the selection process would follow all aspects of the merit selection process as it applies to non-executive Board appointment with two exceptions. The Prime Minister would select the preferred candidate in consultation with the Minister. The Prime Minister would then confer with Cabinet and once Cabinet approval was granted, the Prime Minister would consult with the Leader of the Opposition before making a recommendation to the Governor-General.

The legislation provides for the Nomination Panel to be appointed by the Secretary of the Department of the Prime Minister and Cabinet and sets out processes for its operation. The Nomination Panel is independent and the legislation states it is not subject to direction by the Government.

The role of the Nomination Panel is to invite written applications by persons seeking to be appointed as a Director of the ABC or SBS Board and to conduct a merit-based assessment process for all applicants against the selection criteria. The Panel is to provide a written report to the Minister (or in the case of the Chair of the ABC Board, the Prime Minister) on the outcome of the selection process that contains a list of at least three candidates who are nominated for each appointment.

While the Minister (or in the case of the Chair of the ABC Board, the Prime Minister) may select a candidate who has not been recommended by the Nomination Panel, they are required to table a statement of reasons in both Houses of Parliament within 15 sitting days of the announcement of the appointment.

This mechanism would enable the Minister or Prime Minister to recommend the appointment of an individual not nominated by the Nomination Panel, for example in the case where there is an exceptional candidate. This approach recognises that it is the relevant Minister, or Prime Minister in the case of the ABC Chairperson, that has the statutory obligation to ensure that the candidates are suitable for appointment having regard to the basic criteria set out in the respective Acts.

It is consistent with the principle of Ministerial Responsibility whereby the ultimate responsibility for government appointments is with the relevant Minister.

The new legislation will provide increased certainty for the Boards regarding appointments and tenure. It will strengthen the process and entrench clear rules of appointment and security of tenure for the Nomination Panel. It will set out how they function and underscore the independence of the Panel from Government.

Prior to 2006, the ABC Act provided for the inclusion of a staff-elected director on the Board. The previous Government abolished this position-its rationale for removing the position was to remove a perceived potential conflict that occurred in 2004 between the statutory duties of the staff-elected director to act in good faith and in the best interests of the ABC, and the appointment of that director via election by ABC staff.

The Government does not believe there is any inherent conflict of interest, and we made a commitment in the context of the 2007 election to restore the staff-elected Director position on the ABC Board.

The staff-elected Director plays an important role in enhancing the ABC’s independence by providing the Board with a unique and important insight into ABC operations. The staff-elected Director will often be the only individual with the expertise to question the advice coming to the Board from the ABC’s Executive.

While there was a perception in 2004 of a conflict of interest between the staff elected Director’s duties to the Board and to the staff members who elected them, in fact no such conflict existed. The staff-elected Director has the same duties, rights and responsibilities as all other non-executive Directors. Like any other ABC director, the staff elected Director’s primary duty is to act in the best interests of the corporation. The only difference between the staff-elected Director and other ABC directors is their means of appointment.

The ABC is a ‘Commonwealth authority’ for the purpose of the Commonwealth Authorities and Companies Act 1997. This Act imposes a number of obligations on officers (directors and senior managers) of Commonwealth authorities, including requirements to act with due care and diligence, to act in good faith in the best interests of the Commonwealth authority, and to not improperly use their position to gain an advantage to themselves or someone else, or to cause detriment to the Commonwealth authority. These obligations apply equally to the staff-elected Director and to all other Directors.

There is nothing in the present Act or amendment that says the duties of the staff-elected Director are different to those of the other non-executive directors on the board.

The Government’s expectation is that the staff-elected Director will act in the interest of the Corporation as a whole, not in the interest of one particular group; they will be obliged to comply with all legal duties and obligations that apply to directors generally and to adhere to best practice corporate governance.

It is the responsibility of the Board to ensure that all Directors are aware of their primary duty to act in the interest of the Corporation as a whole. This point was made by the Australian National Audit Office in 1999 when it noted in its discussion paper about corporate governance that a written code of conduct, approved by the Board, setting out ethical and behavioural expectations for both directors and employees was a “better practice” governance principle for the Board of a Commonwealth authority or company .

The measures in this Bill deliver on the Government’s election commitments to introduce a new merit-based appointment process for the ABC and SBS Boards and to restore the position of staff-elected Director on the ABC Board. They will increase the transparency and democratic accountability of the ABC and SBS Boards and will strengthen our national broadcasters and assist in ensuring they continue to provide Australians with high quality broadcasting services, free from political interference.

Debate (on motion by Senator Wong) adjourned.